Testimony

Before the Subcommittee on Technology and

Procurement Policy

Committee on Government Reform, U.S. House of

Representatives

United States General Accounting Office

GAO

For Release on Delivery

Expected at 10:00 a.m. EST

Tuesday July 31, 2001 HUMAN CAPITAL

Building the Information

Technology Workforce to

Achieve Results

Statement of David M. Walker

Comptroller General of the United States

GAO-01-1007T
Human Capital: Building the Information

Technology Workforce to Achieve Results

Page 1 GAO-01-1007T

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to discuss with you this morning the federal

government’s strategic human capital management challenges, with

particular emphasis on the information technology area.

No management issue facing federal agencies could be more critical to

their ability to serve the nation than their approach to attracting, retaining,

and motivating people. The need is a reflection of the times: Our society

has transitioned from the industrial age to the knowledge age, and people

are the source of all knowledge. Every organization today depends on its

people to contribute knowledge, create knowledge, and put knowledge to

practical use. Federal agencies are no different. For these organizations,

having sufficient numbers of people on board with the right mix of

knowledge and skills will make the difference between success and

failure. This is especially true in the information technology area, where

widespread shortfalls in human capital have contributed to demonstrable

shortfalls in agency and program performance.

I would like to make two main points:

First, the federal government today faces pervasive human capital

challenges that are eroding the ability of many agencies—and threatening

the ability of others—to economically, efficiently, and effectively perform

their missions. Many parties will need to work to address these challenges,

including the President, department and agency leaders, the Office of

Management and Budget, the Office of Personnel Management, the

Congress, the private sector, foundations and academia, and even the

press.

Second, how successfully the federal government acquires and uses

information technology will continue to hinge on its ability to build,

prepare, and manage its information technology workforce. However,

agencies must overcome two basic challenges related to IT human capital:

a shortage of skilled workers and the need to provide a broad range of

related staff training and development. These are essential challenges to

address so that the managers and staff can effectively operate and

maintain government systems, adequately oversee related contractor

support, and deliver responsive service to the public.

In addition to discussing these two main points, at the Subcommittee’s

request I will briefly discuss selected GAO human capital efforts. Also, I

Human Capital: Building the Information

Technology Workforce to Achieve Results
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Technology Workforce to Achieve Results

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will briefly discuss human capital challenges facing the government’s

acquisitions workforce.

We at GAO use the term “human capital” because—in contrast to

traditional terms such as personnel and human resource management—it

focuses on two principles that are critical in a modern, results-oriented

management environment. First, people are assets whose value can be

enhanced through investment. As the value of people increases, so does

the performance capacity of the organization and therefore its value to

clients and other stakeholders. As with any investment, the goal is to

maximize value while managing risk. Second, an organization’s human

capital approaches must be aligned to support the mission, vision for the

future, core values, goals and objectives, and strategies by which the

organization has defined its direction and its expectations for itself and its

people. An organization’s human capital policies and practices should be

designed, implemented, and assessed by the standard of how well they

help the organization pursue these intents and achieve related results.

It is clear that, in many government entities and functional areas such as

information technology and acquisitions, the transition to modern, resultsoriented management—and along with it, to strategic human capital

management—will require a cultural transformation. Hierarchical

management approaches will need to yield to partnerial approaches.

Process-oriented ways of doing business will need to yield to resultsoriented ones. And siloed organizations will need to become integrated

organizations if they expect to make the most of the knowledge and skills

of their people. Government entities that expect to ensure accountability

for performance and make the best use of their human capital will need to

build a solid foundation in strategic planning and organizational alignment,

leadership and succession planning, recruiting and training the best

possible talent, and creating a strong performance culture—including

appropriate performance measures and rewards and a focus on

continuous learning and knowledge management.

A key step for agencies is to focus on human capital as a strategic asset.

Agencies can begin by assessing how well their existing human capital

approaches support their missions, goals, and other organizational needs.

A useful self-assessment tool is our human capital checklist, which

identifies a number of human capital elements and underlying values that

Background: What We

Mean By “Human

Capital”
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Technology Workforce to Achieve Results

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are common to high-performing organizations.1 (See attachment I.) We

have used the checklist’s assessment framework to guide our recent

inquiries into human capital issues across the federal government and at

specific agencies, some of which are using the framework in their human

capital planning efforts. We have also used this framework to assess and

guide our own internal GAO efforts.

High-performing organizations in the private and public sectors have long

understood the relationship between effective “people management” and

organizational success. However, the federal government, which has often

acted as if federal employees were costs to be cut rather than assets to be

valued, has only recently received its wake-up call. As our January 2001

Performance and Accountability Series reports made clear, serious federal

human capital shortfalls are now eroding the ability of many federal

agencies—and threatening the ability of others—to economically,

efficiently, and effectively perform their missions.2 Agencies’ strategic

human capital management challenges involve such key areas as strategic

human capital planning and organizational alignment; leadership

continuity and succession planning; acquiring and developing staffs whose

size, skills, and deployment meet agency needs; and creating resultsoriented organizational cultures. Attachment II provides examples of the

federal government’s pervasive human capital challenges, from military

recruitment shortfalls at the Department of Defense to staff and skills

losses at the National Aeronautics and Space Administration to inadequate

workforce planning at the Environmental Protection Agency.

In January 2001, we added strategic human capital management to our list

of federal programs and operations identified as high risk.3 However, we

continue to stress that federal employees are not the problem. Rather, the

problem is a long-standing lack of effective leadership and management,

along with the lack of a strategic approach to marshaling, managing, and

maintaining the human capital needed for government to discharge its

 1

 See Human Capital: A Self-Assessment Checklist for Agency Leaders (GAO/OCG-00-14G,

Sept. 2000).

2 Performance and Accountability Series—Major Management Challenges and Program

Risks: A Governmentwide Perspective (GAO-01-241, Jan. 2001). In addition, see the

accompanying 21 reports, numbered GAO-01-242 through GAO 01-262, on specific agencies.

3 High-Risk Series: An Update (GAO-01-263, Jan. 2001). In addition, see Human Capital:

Meeting the Governmentwide High-Risk Challenge (GAO-01-357T, Feb. 1, 2001).

Strategic Human

Capital Management:

Confronting The HighRisk Challenge
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responsibilities and deliver on its promises. After a decade of government

downsizing and curtailed investments in people, it is becoming

increasingly clear that today’s federal human capital strategies are not

appropriately constituted to meet the current and emerging needs of the

nation’s government and its citizens. The federal government’s approach

to people management includes a range of outmoded attitudes, policies,

and practices that warrant serious and sustained attention. To view federal

employees as costs to be cut rather than as assets to be valued would be to

take a narrow and shortsighted view—one that is obsolete and must be

changed.

Ever since we added strategic human capital management to our high-risk

list, we have been asked what would need to happen for it to be removed.

Clearly, we will need to see measurable and sustainable improvements in

the economy, efficiency, and effectiveness with which the government as a

whole and the individual agencies manage their workforces to achieve

their missions and goals. I believe that congressional hearings such as

today’s demonstrate that the momentum for these improvements is

building, but the process will undoubtedly take time.

Clearly, there is very little time to waste. Changes in the demographics of

the federal workforce, in the education and skills required of its workers,

and in employment structures and arrangements are all continuing to

unfold. The federal workforce is aging; the baby boomers, with their

valuable skills and experience, are drawing nearer to retirement; new

employees joining the federal workforce today have different employment

options and different career expectations from the generation that

preceded them. In response to an increasingly competitive job market,

federal agencies will need the tools and flexibilities to attract, retain, and

motivate top-flight talent. More and more, the work that federal agencies

do requires a knowledge-based workforce that is sophisticated in new

technologies, flexible, and open to continuous learning. This workforce

must be adept both at delivering services directly and at effectively

managing the cost and quality of services delivered by third parties on the

government’s behalf. Agencies’ employment structures and working

arrangements will also be changing, and the workplace will need to

accommodate a greater mix of full-time, part-time, and temporary

workers; more contracting-out; less job security; and the possibilities of

additional government downsizing and realignments.

With these challenges in mind, it is clear that federal agencies must not

wait to modernize their human capital policies and practices. Key
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elements such as hiring, staffing, compensation, promotions, training and

development, and performance management all need to be aligned with

organizational missions and goals, and must be approached as interrelated

parts of a coherent human capital management strategy. Other elements

must also be considered. In the information area in particular, other key

elements will include sourcing, contract oversight, knowledge

management, and systems development. Overall, and in critical

occupational areas, agencies can and must take the initiative to be more

competitive in attracting new employees with needed skills; design and

implement modern, effective and credible performance evaluation

systems; create the kinds of performance incentives and training programs

that motivate and empower employees; and build labor-management

relationships that are based on common interests and the public trust. To

shape human capital strategies that support their specific needs and

circumstances, agencies must give strategic human capital management

the enhanced and sustained attention it deserves, modernize their existing

human capital policies and practices, and identify and make use of the

tools and flexibilities available to them under current law.

To address the federal government’s human capital challenges as a whole,

we believe a three-stage approach is appropriate. First, agencies must take

all administrative steps available to them under current laws and

regulations to manage their people for results. Much of what agencies

need to accomplish by way of focusing on human capital management is

already available to them.4

 They will, however, need the sustained

commitment from top management and the support from both the Office

of Management and Budget (OMB) and the Office of Personnel

Management (OPM) to make the most of their existing authorities. Second,

the Administration and the Congress should pursue selected legislative

opportunities to put new tools and flexibilities in place that will help

agencies attract, retain, and motivate employees—both overall and,

especially, in connection with critical occupations such as those in IT.

Third, all interested parties should work together to determine the nature

and extent of more comprehensive human capital (or civil service)

reforms that should be enacted over time. These reforms should include

greater emphasis on skills, knowledge, and performance in connection

with federal employment and compensation decisions, rather than the

passage of time and rate of inflation, as is often the case today.

 4 See Human Capital: Taking Steps to Meet Current and Emerging Human Capital

Challenges (GAO-01-965T, July 17, 2001).
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Mr. Chairman, as is clear from the array of witnesses you have gathered

for today’s hearing, addressing the federal government’s human capital

challenges is a responsibility shared by many parties. This includes the

President, department and agency leaders, OMB, OPM, the Congress, the

private sector, foundations and academia, and even the press. (See

attachment III). As I have noted elsewhere, strategic human capital

management has yet to find the broad conceptual acceptance or political

consensus needed for comprehensive legislative reform to occur. In this

sense, human capital remains the missing link in the framework of federal

management reforms enacted by the Congress over the past decade—

reforms that addressed such essential elements of high performing

organizations as financial management, information technology

management, and results-oriented goal-setting and performance

measurement. However, I believe that the day is approaching when we will

see comprehensive federal human capital legislative reform. The essential

ingredients for progress in this area are leadership, vision, commitment,

persistence, communications, and accountability.

Notably, OPM and OMB have taken steps in the past year to help raise

awareness of the federal government’s human capital challenges and to

encourage and enable agencies to make progress in this area. For

example, OPM has begun stressing to agencies the importance of

integrating strategic human capital management with agency planning and

has also been focusing more attention on developing tools to help

agencies, such as new Senior Executive Service performance standards

and a workforce planning model with associated Web-based research

tools. Some of OPM’s efforts have been directed specifically at addressing

human capital challenges in the information technology area. For example,

in January 2001, OPM created a new special-rate authority to boost the pay

of approximately 33,000 current federal information technology workers

covered by the General Schedule (GS) at grades GS-5, 7, 9, 11, and 12. Both

current and new federal employees are covered by the new pay rates.

Further, OPM has issued a new “job family” classification standard for ITrelated positions that revises and updates the previous standard and

incorporates many formerly separate IT-related occupations into one. The

new special pay rates and classification standard are intended to give

agencies more flexibility in their IT-related recruiting and retention efforts.

OMB’s role in setting governmentwide management priorities and defining

resource allocations will be critical to inducing agencies to integrate

strategic human capital into their core business processes. Toward that

end, OMB has made strategic management of human capital one of the five
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key elements of the President’s Management and Performance Plan, along

with budget and performance integration, expand competitive sourcing,

improving financial performance, and expanding e-government.

OMB’s current guidance to agencies on preparing their strategic and

annual performance plans states that the plans should set goals in such

areas as recruitment, retention, and training, among others. Further, early

this year, OMB instructed agencies to submit a workforce analysis by June

29, 2001. Each agency’s analysis was to include summary information on

the demographics of the agency’s permanent, seasonal, and temporary

workforce; projected attrition and retirements; an evaluation of workforce

skills; expected changes in the agency’s work; recruitment, training, and

retention strategies being implemented; and barriers to maintaining a highquality and diverse workforce. The information that agencies were to

develop may prove useful in identifying human capital areas needing

greater attention and, moreover serve as an important first step toward the

development of agency-specific 5-year restructuring plans in the context of

the agencies’ fiscal year 2003 budget requests and annual performance

plans.

Our experience so far indicates that most agencies have a way to go before

producing human capital strategies that are integrated with their strategic

and programmatic planning processes. For example, earlier this year, we

reported on the extent to which the 24 agencies covered by the Chief

Financial Officers Act discussed human capital issues in their fiscal year

2001 performance plans.5

 Overall, agencies’ plans reflected different levels

of attention to human capital, ranging from merely identifying human

capital challenges to putting forward solutions to address those

challenges, such as defining actual plans, committing resources, and

assigning accountability. We found that, in general, agencies needed to

increase the breadth, depth, and specificity of many related human capital

goals and strategies and to better link them to the agencies’ strategic and

programmatic planning. Currently, we are preparing a summary of

agencies’ attention to human capital issues in their fiscal year 2002

performance plans. Although the summary is not yet complete, our

preliminary review indicates that the agencies continue to have difficulty

 5 Managing for Results: Human Capital Management Discussions in Fiscal Year 2001

Performance Plans (GAO-01-236, Apr. 24, 2001). As part of the Government Performance

and Results Act annual performance planning requirements, agencies are to establish

results-oriented performance goals and describe the strategies and resources—including

human capital—needed to accomplish those goals.
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Technology Workforce to Achieve Results

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in linking their human capital goals to meaningful performance measures

or programmatic results. For example, agencies’ workforce planning

efforts generally were not targeted toward specific agency programmatic

outcomes.

As agencies wrestle with human capital management, they face a

significant challenge in the information management and technology area.

The rapid pace of technological change and innovation in the current

information age poses wide-ranging opportunities for improved

information management and enhanced performance in achieving agency

missions and goals. Investments in information technologies alone are

expected to account for more than 40 percent of all capital investment in

the United States by 2004. The federal government’s IT investment is

conservatively estimated in fiscal year 2002 to be $44 billion—an increase

in federal IT spending of 8.6 percent from fiscal year 2000.6

 This

investment is substantial and should provide opportunities and

demonstrate real results for increasing productivity and decreasing cost.

Already, we have over 1,300 electronic government initiatives under way

throughout the federal government, covering a wide range of activities

involving interaction with citizens, business, other governments, and

employees7

.

However, federal executives and managers must also be cognizant of the

responsibilities and challenges that accompany these opportunities.

Among these challenges are:

• sustaining committed executive leadership and involvement in

technology initiatives;

• building effective e-government business cases that identify full costs and

expected benefits;

• maintaining a citizen focus in service delivery;

• protecting personal privacy and providing a secure computing

environment to reduce the risks of unauthorized access, which can lead to

fraud, theft, destruction of assets, and service disruptions;

 6

Published data from agency Exhibit 53s, Office of Management and Budget (April 9,

2001)

7 Electronic Government: Challenges Must Be Addressed With Effective Leadership and

Management (GAO-01-959T, July 11, 2001).

Rapid Changes In

Information

Technology Require A

Skilled And WellManaged Workforce
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• developing adequate capabilities for storing, retrieving, and when,

appropriate, disposing of electronic records;

• providing a robust technical infrastructure guided by sound enterprise

architectures; and

• ensuring uniform service to the public using multiple methods of access

to government services and process.

Additionally, the rush to electronic government can lessen the emphasis

on the critical human element. Agencies must overcome two basic

challenges related to IT human capital—a shortage of skilled workers and

the need to provide a broad range of related staff training and

development. These are essential challenges to address so that that staff

can effectively operate and maintain new e-government systems,

adequately oversee related contractor support, and deliver responsive

service to the public.

Indeed, in our own study of public and private sector efforts to build

effective Chief Information Officer (CIO) organizations,8

 we found that

leading organizations develop IT human capital strategies to assess their

skill bases and recruit and retain staff who can effectively implement

technology to meet business needs. Figure 1 provides an overview of a

common strategy that organizations in our study used to secure human

capital for information management.

 8 Maximizing the Success of Chief Information Officers: Learning from Leading

Organizations (GAO-01-376G, February 2001).
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Figure 1: Strategy for Securing IT Human Capital in Leading Organizations

Leading organizations assess their IT skills on an ongoing basis to

determine what expertise is needed to meet current responsibilities and

support future initiatives. Needed skills are compared with existing

capabilities in the organization to determine gaps in the IT skills base.

Strengthening IT skills and capabilities identified in the gap analysis is

addressed though training and innovative hiring practices as part of a

formula for building information technology and management capabilities.

Further, we found effective CIO organizations cultivate expertise in their

internal workforces while outsourcing skills that are available from

multiple sources at lower cost. In short, effective staffing and sourcing

strategies provided the organizations we studied with dynamic, flexible

workforces that can execute IT management functions to meet changing

business needs and priorities.

As agencies complete their skills inventories and perform gap analyses

against existing and future IT requirements, it will be important for

executives to determine an appropriate IT sourcing strategy. This should

include an examination of the current and future IT market and a

corresponding assessment of the agency’s ability to attract, hire and retain

managers and staff the needed skills. This information should inform

strategic decisions about the appropriate nature and scope of IT sourcing

needs that are both short and longer-term in nature. Agency executives

should also differentiate between core skills needed to maintain a IT

management “steady state” versus just-in-time needs in hot jobs areas to

address peak workloads brought about by events such as the Year 2000

date conversion crisis, immediate computer security vulnerabilities, or

Recruit

Retain

Training

Source

Tools & 

Technology Recognition

Assess

Skill

Base
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creation of publicly accessible on-line forms required by legislative or

executive branch deadlines. Irrespective of the final decisions regarding

what IT functions are performed by federal employees or contractors,

agencies must have an adequate number of skilled IT professionals to

oversee the cost, quality, and performance of IT contractors.

It is also important to note that the IT human capital challenge is not just

an issue unique to our government or nation alone. The Organization for

Economic Co-operation and Development (OECD)—an international

organization that studies how governments organize and manage the

public sector and identifies emerging challenges that governments are

likely to face—recently issued a report discussing the recurring problem

of the lack of IT skills in the public sector.9

 The report found that the lack

of IT skills makes it impossible for some countries to develop technology

in-house and establishes an imbalance in relations between purchasers

and providers. Moreover, as in the United States, against the background

of a very tight IT labor market and an ever-increasing demand for highly

qualified staff, the report noted that the competitiveness of the public

employer has to be visibly strengthened.

Interestingly, solutions seem to vary according to the different traditions

in OECD member countries and can include higher wages, differentiated

pay systems, better knowledge management, and better human resources

management. For example, many countries have undertaken knowledge

management initiatives, including training of staff and collecting IT-related

information in databases. To illustrate, the United Kingdom has set up a

database on all high-profile public sector IT-enabled projects, including

project descriptions as well as a list of people running these initiatives.

The database is expected to allow existing resources to be incorporated in

future projects.

The demand for IT workers remains robust despite the decrease in

demand over the last year. Notwithstanding the recent economic

slowdown, employers from every sector, including the federal

government, are still finding it difficult to meet their needs for highly

skilled IT workers. In the long term, demand is expected to increase. The

Bureau of Labor Statistics projects that the demand for computer systems

 9 The Hidden Threat to E-Government: Avoiding Large Government IT Failures, OECD

Public Management Policy Brief Number 8 (Mar. 2001).

Demand for Skilled IT

Workers Remains

Substantial Despite Recent

Slowdown
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analysts, engineers, and scientists will almost double between 1998 and

2008 and the demand for computer programmers will increase by 30

percent during the same time period. 10 While recent data indicate a

slowing demand, the ability of the United States to meet this demand is

still considered a problem. In April, the Information Technology

Association of America (ITAA) released a study on the size of the privatesector IT workforce, the demand for qualified workers and the gap

between the supply and demand.11 Among the study’s top findings were the

following:

• Information technology employment remains at the forefront of the United

States economy, directly accounting for approximately 7 percent of the

nation’s total workforce. Over 10.4 million people in the United States are

IT workers, an increase of 4 percent over the 10 million reported for last

year.

• The demand for IT workers—while slowing—remains substantial, as

employers attempt to fill over 900,000 new IT jobs in 2001. For example,

the demand for skilled IT workers by large IT firms has doubled over the

year 2000 figure. However, ITAA has noted that overall demand for IT

workers is down 44 percent from last year’s forecast, attributable in part,

to the slowdown in the high tech sector and the economy in general. Still,

the drop does not reflect a fall-off in IT employment, which will increase

year to year.

• The talent gap for IT workers remains large. Hiring managers reported an

anticipated shortfall of 425,000 IT workers because of a lack of applicants

with the requisite technical and non-technical skills.

The ITAA also reported that despite softening in overall demand, technical

support, database development/administration, programming/software

engineering, web development/administration, and network

design/administration are the “hot skills” that remain most in demand by

IT and non-IT companies alike. These positions represent nearly 86

percent of the demand for IT workers. The study further notes that the

demand for enterprise systems professionals and network designers and

administrators increased by 62 percent and 13 percent respectively. The

increases suggest that companies may be staffing less in anticipation of

 10 “The 1998-2008 Job Outlook in Brief” Occupational Outlook Quarterly (Bureau of Labor

Statistics, Spring 2000).

11 When Can You Start? Building Better Information Technology Skills and Careers,

Information Technology Association of America (April 2001).
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winning new business and concentrating instead on rationalizing

technology investments, tightening operations and making infrastructure

improvements.

As is apparent, the need for qualified IT professionals has placed the

public sector in direct competition with the private sector for scarce

resources. For the second consecutive year, federal CIOs have identified

the need for skilled IT workers as their most critical issue.12 This is related

to the stark reality that a substantial portion of the federal workforce will

retire between fiscal years 1999 and 2006. We recently estimated that by

2006 about 31 percent13 of 24 major departments and agencies’ employees

working in 1998 will be eligible to retire, and that through the end of 2006

about half of those eligible will actually retire.14 In the area of IT, all 24

major departments and agencies reported that they consider the

occupation in the computer specialist series as mission-critical. We

estimated that 30 percent of the employees in this series would be eligible

to retire by the end of fiscal year 2006 and that 14 percent would retire by

then. (See figure 2).

 12 Update: Implementation of the Federal IT Workforce Challenge Recommendations,

Chief Information Officers Council, Federal IT Workforce Committee (Mar. 21, 2001).

13 The eligibility estimate of 31 percent is based on cumulative data, which includes those

already eligible and those reaching retirement eligibility between fiscal years 1999 through

2006, less the estimated 4 percent who are estimated to leave before they become eligible

to retire.

14 Federal Employee Retirements: Expected Increase Over the Next 5 Years Illustrates

Need for Workforce Planning (GAO-01-509, Apr. 27, 2001).

Sustained Attention to

Federal IT Human Capital

Challenges Is Key to

Achieving Agency

Performance

Improvements
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Figure 2: Eligible and Estimated Percentage of Selected Federal Workforce to Retire

in FY 2006

Source: Federal Employee Retirements, Expected Increase Over the Next 5 Years Illustrates Need

for Workforce Planning (GAO-01-509, Apr. 27, 2001).

Federal organizations such as OPM and the federal CIO Council are taking

a number of steps towards developing solutions for the federal

government’s IT human capital solutions. For example, as I mentioned

earlier, in January 2001 OPM established higher pay rates for new and

currently employed computer specialists, computer engineers, and

computer scientists at grades GS-5, 7, 9, 11, and 12—the levels at which

OPM identified the most severe federal IT staffing problems and at which

it found that GS salaries lag far behind non-federal salaries. In

combination with the across-the-board GS increase, the special pay rates

produced overall net increases ranging from 7 percent to 33 percent for

most affected employees. The special rates are designed to help agencies

address significant problems in recruiting high-quality entry- and

developmental-level federal IT workers with the latest skills. OPM has

stated that it will continue to monitor the IT staffing situation to determine

whether the special rates should be expanded. It will be important to track

how the salary increases affect the federal government’s ability to hire and

retain qualified IT professionals.

The CIO Council also has a Federal IT Workforce Committee focused on

facilitating activities designed to (1) improve the federal government’s

ability to attract and retain a top-notch IT workforce and (2) expand
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effective IT education and training opportunities for the existing federal

workforce.15 Among the Council’s initiatives is the support of the CIO

University, which is a collaborative effort between the federal government

and private institutions to develop IT executives and support of the

Strategic and Tactical Advocates for Results (STAR) program. STAR is a

graduate-level program designed to create an optimal learning

environment for professionals. The Council also committed to reviewing

and revising the CIO core competencies on a biennial basis. These

competencies serve as a tool for determining IT skills, knowledge, and

education requirements.

To help better understand the magnitude of federal IT human capital

issues and possible alternatives for new solutions, the CIO Council and the

Administrative Office of the U.S. Courts asked the National Academy of

Public Administration (NAPA) to study IT compensation strategies and to

make recommendations on how the government can best compete for IT

talent. NAPA has completed and reported on the first phase of this study.

NAPA expects to complete its final report by mid-September. It will

contain an evaluation of alternative compensation models and address

recommended solutions.

Table 1 summarizes NAPA’s overall comparison of compensation and

work factors among various sectors, which demonstrates some of the

similarities and differences among the sectors. NAPA’s high, medium, and

low designations shown below are based on an overall evaluation of data

and information obtained for organizations in each sector in comparison

with the other sectors.

 15 Strategic Plan: Fiscal Year 2001-2002, Chief Information Officers Council (October

2000).
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Table 1: Overall Comparison of Compensation and Work Factors

Sector Salary levels

Work-life

benefits

Rewards/

recognition

Advancement/

Training Use of recruiting tools

Federal Low High Low Low Low

State Low Medium Medium Medium Medium

Local Low Medium Medium Low Low

Non-profit Medium Medium Medium Medium High

Private High High High High High

Academia Medium High Medium Medium Medium

Source: Comparative Study of Information Technology Pay Systems: Executive Study (NAPA, March

2001).

To date, we have issued reports on the IT human capital management

practices at two agencies—the Small Business Administration (SBA) and

the United States Coast Guard.16 We also have similar work ongoing at the

Social Security Administration and the Centers for Medicare and Medicaid

Services. Our evaluations have focused on agency practices in four areas:

• Requirements—assessing the knowledge and skills needed to effectively

perform IT operations to support agency mission and goals

• Inventory—determining the knowledge and skills of current IT staff to

identify gaps in needed capabilities

• Workforce strategies and plans—developing strategies and

implementing plans for hiring, training, and professional development to

fill the gap between requirements and current staffing

• Progress evaluation—evaluating progress made in improving IT human

capital capability, and use the results of these evaluations to continuously

improve the organization’s human capital strategies

The results of our reviews indicate that although agencies are initiating

strategies and plans to attract, retain, and/or train a skilled IT workforce,

much remains to be done. Common weaknesses include a lack of (1)

organizational commitment, (2) effective workforce planning, and (3)

meaningful performance evaluation systems. For example, none of the

agencies we reviewed had completed workforce planning activities, such

as identifying knowledge and skill requirements and inventorying current

staff capabilities. Further, none had developed and implemented

 16Information Technology Management: SBA Needs to Establish Policies and Procedures

for Key IT Processes (GAO/AIMD-00-170, May 31, 2000) and Information Technology

Management: Coast Guard Practices Can Be Improved (GAO-01-190, Dec. 12, 2000).

Agencies’ Progress in

Addressing IT Human

Capital Strategies Has

Been Sluggish
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Page 17 GAO-01-1007T

mechanisms to evaluate progress in improving staff IT capabilities and

therefore lacked the evaluation results that would have been used to

continuously improve human capital strategies.

The ramifications of the deficiencies in the agencies’ IT human capital

management efforts are serious. Without complete assessments of IT skill

needs, agencies will lack assurance that they have effectively identified the

number of staff they will require with the specific knowledge and skills

needed to sustain their current and future operations and developed

strategies to fill these needs. Also, lacking an inventory of IT knowledge

and skills, agencies will not have assurance that they are optimizing the

use of current IT workforce nor have data on the extent of IT skill gaps.

This information is necessary to developing effective workforce strategies

and plans. Further, without analyzing and documenting the effectiveness

of workforce strategies and plans, senior decisionmakers lack assurance

that they are effectively addressing IT knowledge and skill gaps.

At GAO, we have faced human capital challenges similar to those facing

the federal government in general and the IT area specifically. However,

we have made human capital management a top priority. We are

undertaking a wide array of initiatives in this area and are investing

considerable time, energy, and financial resources to make them work.17

The aim of these efforts is to enhance our performance and assure our

accountability by attracting, retaining, and motivating a top-quality

workforce, including staff in critical occupations such as IT. We have

identified and made use of a variety of tools and flexibilities, some of

which were made available to us through the GAO Personnel Act of 1980

and some through legislation passed by the Congress in 2000, but most of

which are available across the broad spectrum of federal agencies.

The past decade was a difficult one for ensuring that GAO’s workforce

would remain appropriately sized, shaped, and skilled to meet its mission

demands. Severe downsizing of the workforce, including a suspension of

most hiring from 1992 through 1997, and constrained investments in such

areas as training, performance incentives and rewards, and enabling

technology, left us with a range of human capital challenges that we have

begun to address. We face certain skills imbalances that include a pressing

 17 See Human Capital: Taking Steps to Meet Current and Emerging Human Capital

Challenges (GAO-01-965T, July 17, 2001).

GAO Has Taken Steps

To Meet Human

Capital Challenges,

Including Those In

The It Area
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need for information technology professionals, but also for other skilled

professionals such as accountants, statisticians, economists, and health

care analysts. Further, we face a range of succession planning challenges.

Specifically, by fiscal year 2004, 55 percent of our senior executives, 48

percent of our management-level analysts, and 34 percent of our analyst

and related staff will be eligible for retirement. Moreover, at a time when a

significant percentage of our workforce is nearing retirement age,

marketplace, demographic, economic, and technological changes indicate

that competition for skilled employees will be greater in the future,

making the challenge of attracting and retaining talent even more

complex.

To address these challenges, we have taken numerous steps, all designed

to support our strategic plan, which describes our role and mission in the

federal government; our core values of accountability, integrity, and

reliability that guide our work; the trends, conditions, and external factors

underlying the plan; and our goals, objectives, and strategies for serving

the Congress. From a human capital standpoint, our strategic plan and

core values are our touchstones for designing, implementing, and

evaluating our approaches to managing our people. These two vital

elements will also be the foundation for our revised institutional and

individual performance measurement and reward systems.

In addition to laying the groundwork through strategic planning, in the fall

of 2000 we realigned our mission-related functions at headquarters and the

field to better support the Congress and prepare ourselves, with current

and expected resource levels, to meet the future challenges outlined in our

strategic plan. As with strategic planning, organizational alignment is

crucial if an agency is to maximize its performance and assure its

accountability. The choices that go into aligning an organization to support

its strategic and programmatic goals have enormous implications for

further decisions about human capital management, such as what kinds of

leaders the agency should have and how it will best ensure leadership

continuity, how skills needs will be identified and filled—particularly in

critical occupations such as IT—and what strategies the agency will use to

steer the organizational culture to maximize its results.

We have taken many administrative steps to enhance the value of our

human capital. (See figure 3).
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Figure 3: Administrative Actions to Address GAO’s Human Capital Challenges

• Self-assessment checklist

• Human capital profile/planning

• Employee feedback survey and

suggestion program

• Employee Advisory Council

• Enhanced employee

communications/participation

• Skills/knowledge inventory

• Employee preference survey

• Competency model/competency

based appraisal system

• Workforce and succession

planning

• Recruiting and college relations

• Training/development

• Recognition and rewards

• Flexitime and Flexiplace

• Business casual and business

cards

• Enabling technologies

• Commuting subsidy (pending)

• College loan repayment fund

(pending)

• Opportunity/Inclusiveness

Also, as seen in figure 4, we have pursued flexibilities that were made

available to us through legislation. It should be noted that strategic human

capital management is a work-in-progress for us, as it is for others. Our

approaches are not the only way for agencies to proceed, but they can

help others to see their way forward to addressing their individual human

capital challenges.
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Figure 4: Use of Legislative Flexibilities to Address GAO’s Human Capital

Challenges

• Broadbanding system for mission staff

• Excepted hiring authority (e.g., internship program)

• Special pay rates

• Senior Level for technical staff

• Targeted early outs and buyout authority

• Revised RIF rules

Among these challenges at GAO is the need to attract and retain IT and

other technical staff. The steps we have taken to meet this challenge

include the following:

• Expanding our overall recruiting efforts, to increase our presence at

colleges and universities by leveraging technology and by our participation

at area job fairs. To support our increased efforts, GAO is enhancing the

existing Applicant Tracking System. This is an interim effort to render the

system more user friendly and robust in order to meet the needs of GAO’s

staff involved in recruitment, while providing better service to GAO

applicants. GAO is also exploring Web-based recruitment services that

support the advertisement of vacancies, the receipt and processing of

applications, and the development and maintenance of Web-based

recruitment targeted for specific skills.

• Using a 25 percent pay differential (equal to the OPM pay differential for

executive branch IT hires) to bring aboard entry-level technical staff for

our IT team.

• Offering pay bonuses in attracting and retaining top IT talent with specific

technical skill sets.

• Making wide use of contractor resources in the IT area to supplement both

the numbers and skill sets of government employees. Currently, about 60

percent of the staff supporting GAO internal IT operations and initiatives

are contractor staff. The other 40 percent are in-house staff. Given staffing

constraints and market conditions, we have found this arrangement to

work very well. We focus our training of in-house staff on project

management, contract management, and technical training to ensure

sound project management and oversight of the contractors. Using

contractor resources has given us the ability to quickly bring on staff with

the IT skills needed to carry out new projects/initiatives.

• Transitioning from a traditional classroom training approach to one that

combines and balances classroom training with various online learning

experiences that can be delivered at the desktop. To support this approach
Human Capital: Building the Information

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to learning, GAO plans to acquire a system that will maintain on-line

individual development plans supported by competency-based learning

paths and to support the development and delivery of Web-based learning

with on-line testing and on-line course evaluations.

• Using the authority that the Congress provided in our 2000 legislation to

create Senior Level positions to meet certain scientific, technical, and

professional needs and to extend to those positions the rights and benefits

of SES employees. One of the areas targeted was IT. We recently named

four new Senior Level technical IT positions, and provided a few other

specialists—such as our Chief Statistician and Chief Accountant—with

new titles and SES-equivalent benefits.

The authority to create Senior Level positions in certain critical areas

reflects a specific need we identified and to which the Congress

responded. As we assessed GAO’s human capital challenges at the start of

the new century—including those related specifically to the IT area—we

recognized that our preexisting personnel authorities would not let us

address these challenges effectively. Therefore, using comprehensive

workforce data that we had gathered and analyzed to make a coherent

business case, we worked with the Congress last year to obtain several

narrowly tailored flexibilities to help us reshape our workforce and

establish the Senior Level technical positions.

Along with the Senior Level positions, the legislation gave us additional

tools to realign GAO’s workforce in light of overall budgetary constraints

and mission needs; to correct skills imbalances; and to reduce high-grade,

managerial, or supervisory positions without reducing the overall number

of GAO employees. To address any or all of these three situations, we now

have authority to offer voluntary early retirement (VER) to a maximum of

10 percent of our employees each fiscal year until December 31, 2003. We

also have the authority to offer voluntary separation incentive (VSI)

payments to a maximum of 5 percent of our employees during each fiscal

year until December 31, 2003. Further, in the case of a reduction-in-force

(RIF), we have the authority to place a much greater emphasis in our

decisionmaking on our employees’ knowledge, skills, and performance,

while retaining veterans’ preference and length of service as factors to

consider in connection with applicable RIFs.

Since the legislation was enacted, we have established agency regulations

for implementing the VER program. Having analyzed GAO workforce data,

we recently began offering voluntary early retirements to take effect from
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October 1, 2001 until January 3, 2002. We have largely limited our

voluntary early retirement offers to organizational areas in which we do

not expect to grow, while at the same time stepping up our efforts to

recruit and retain employees in critical occupations such as those related

to information technology.

The development of agency regulations to cover VSIs and RIFs is still in

progress. We have no plans to offer VSIs, nor do we intend to pursue any

involuntary layoffs during this or the next fiscal year.

We believe that three of the authorities provided in our 2000 legislation

may have broader applicability for other agencies and are worth

congressional consideration at this time. Authority to offer voluntary early

retirement and voluntary separation incentives could give agencies

additional flexibilities with which to realign their workforces; correct

skills imbalances; and reduce high-grade, managerial, or supervisory

positions without reducing their overall number of employees. Further, the

authority to establish Senior Level positions could help agencies become

more competitive in the job market, particularly in critical scientific,

technical, or professional areas.

Further, the Administration and the Congress should consider other

legislative actions that would help federal employers address their human

capital challenges. As demographics change, as the marketplace continues

to evolve, we will continue to think strategically and proactively to identify

areas in which new innovations would make good business sense. In this

regard, we believe it is worth exploring selective legislative proposals to

enhance the federal government’s ability to attract, retain, and motivate

skilled employees, particularly in connection with critical occupations, on

a governmentwide basis. In addition to the three items I just mentioned,

the following represent areas in which opportunities exist to better equip

federal employers to meet their human capital needs:

• Critical occupations. Although agencies generally have more hiring and

pay flexibilities today than in the past, further innovations might be

explored to help federal agencies recruit, retain, and reward employees in

such critical fields as information technology, where there is severe

competition with other sectors for talent.

• Recruiting funds. In order to help attract and retain employees,

consideration should be given to authorizing agencies to use appropriated

funds for selective recruiting, recognition, and team building activities.

Further Legislative

Reforms Should Be

Explored
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• Professional development. To encourage federal employees in their

professional development efforts, consideration should be given to

authorizing agencies to use appropriated funds to pay for selected

professional certifications, licensing, and professional association costs.

• Pay compression relief. Executive compensation is a serious challenge for

federal agencies, which to an increasing extent must compete with other

governmental organizations—and with not-for-profit and private sector

organizations—to attract and retain executive talent. In this regard, the

existing cap on SES pay has increased pay compression between the

maximum and lower SES pay levels, resulting in an increasing number of

federal executives at different levels of responsibility receiving identical

salaries. Further, pay compression can create situations in which the

difference between executive and nonexecutive pay is so small that the

financial incentive for managers to apply for positions of greater

responsibility may disappear. The Congress needs to address this

increasing pay compression problem. It could do so, perhaps, by delinking

federal executive compensation from congressional pay, or by raising the

cap on executive performance bonuses.

• Cafeteria benefits. Federal employees could be provided with flexible

benefits available to many private sector workers under Section 125 of the

Internal Revenue Service Code. This would give federal employees the

ability to pay for such things as childcare or eldercare with pre-tax rather

than after-tax dollars.

• Frequent flyer miles. Employees who travel on government business

should be allowed to keep their “frequent flyer” miles—a small benefit but

one that private sector employers commonly provide their people as part

of a mosaic of competitive employee benefits. Let’s face it, flying is not fun

anymore. Allowing federal workers to keep these miles, as employees

elsewhere can, is a small price to pay. In addition, federal agencies could

still use gainsharing programs to reward employees and save the

government travel costs. As you know, Mr. Chairman, there has already

been some meaningful progress on this issue: Last week, the House

Government Reform Committee approved a bill that would allow civil

service employees to “retain for personal use promotional items received

as a result of travel taken in the course of employment.”

• Phased retirement. It may be prudent to address some of the succession

planning issues associated with the rise in retirement eligibilities by

pursuing phased retirement approaches, whereby federal employees with

needed skills could change from full-time to part-time employment and

receive a portion of their federal pension while still earning pension

credits.
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• Fellowships. The Congress should explore greater flexibilities to allow

federal agencies to enhance their skills mix by leveraging the expertise of

private and not-for-profit sector employees through innovative fellowship

programs, particularly in critical occupations. Through such fellowships,

private and not-for-profit professionals could gain federal experience

without fully disassociating themselves from their positions, while federal

agencies could gain from the knowledge and expertise that these

professionals would bring during their participation in the program.

Obviously, appropriate steps would have to be taken to address any

potential conflicts. This concept could also be used to allow federal

workers to participate in fellowship programs with private and not-forprofit sector employers.

The federal government spends about of $200 billion a year contracting for

goods and services. We are concerned with having the right people with

the right skills to successfully manage federal contracts. We all agree that

dealing with this issue will not be easy. The government is facing evergrowing public demands for better and more economical delivery of

products and services. At the same time, the ongoing technological

revolution requires a workforce with new knowledge, skills, and abilities.

And at the moment, agencies must address these challenges in an

economy that makes it difficult to compete for people with the

competencies needed to achieve and maintain high performance. This

situation is aptly illustrated by the problems found in the growing area of

acquiring services.

Federal agencies spend billions of tax dollars each year to buy services

ranging from clerical support and consulting services to information

technology services, such as network support, to the management and

operation of government facilities, such as national laboratories. Our work

continues to show that some service procurements are not being done

efficiently, putting taxpayer dollars at risk. In particular, agencies are not

clearly defining their requirements, fully considering alternative solutions,

performing vigorous price analyses, or adequately overseeing contractor

performance. Further, it is becoming increasingly evident that agencies are

at risk of not having enough of the right people with the right skills to

manage service procurements. Consequently, a key question we face in the

federal government is whether we have today, or will have tomorrow, the

ability to acquire and manage the procurement of increasingly

sophisticated services the government needs.

Acquisition Workforce

Challenges Hinder

Government’s Ability

To Oversee Outside

Contractors
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Page 25 GAO-01-1007T

The amount being spent on services is growing substantially. Last year

alone, the federal government acquired more than $87 billion in services—

a 24-percent increase in real terms from fiscal year 1990. In fact,

government purchase of services now accounts for 43 percent of all

federal contracting expenses—surpassing supplies and equipment as the

largest component of federal contract spending. Another dimension to this

issue is that federal agencies are increasingly contracting out for

information technology services.

The growth in service contracting has largely been driven by the

government’s increased purchases of two types of services:

• information technology services, which increased from $3.7 billion in

fiscal year 1990 to about $13.4 billion in fiscal year 2000, and

• professional, administrative, and management support services, which

rose from $12.3 billion in fiscal year 1990 to $21.1 billion in fiscal year

2000.

The increase in the use of service contracts coincided with a 21-percent

decrease in the federal workforce,18 which fell from about 2.25 million

employees as of September 1990 to 1.78 million employees as of

September 2000.

As federal spending and employment patterns were changing, changes

were also occurring in the way that federal agencies buy services.

Specifically, there has been a trend toward agencies purchasing

professional services using contracts awarded and managed by other

agencies. For example, in 1996, the General Services Administration (GSA)

began offering information technology services under its Federal Supply

Schedule program,19 and it now offers services ranging from professional

engineering to laboratory testing and analysis to temporary clerical and

professional support services. The use of the schedule program to acquire

services has increased significantly over the past several years.

 18 This decrease reflects the total civilian employment for executive branch agencies,

excluding the U.S. Postal Service and the Postal Rate Commission.

19 Under the schedule program, GSA negotiates contracts with vendors for a wide variety of

mostly commercial-type products and services, and permits other agencies to place orders

under these contracts directly with the vendors. Traditionally, the program had generally

been used for common goods, such as office supplies and furniture. According to GSA, it

takes 268 days to award a contract using traditional methods, but it takes only 15 days, on

average, to award an order under the schedule program.
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Other governmentwide contracts have also come into use in recent years.

The Federal Acquisition Streamlining Act of 1994 authorized federal

agencies to enter into multiple-award, task- and delivery-order contracts

for goods and services. These contracts provide agencies with a great deal

of flexibility in buying goods or services while minimizing the burden on

government contracting personnel to negotiate and administer contracts.

The Clinger-Cohen Act of 1996 authorized the use of multiagency

contracts and what have become known as governmentwide agency

contracts to facilitate purchases of information technology-related

products and services such as network maintenance and technical

support, systems engineering, and integration services.

While we have seen the environment change considerably, what we have

not seen is a significant improvement in federal agencies’ management of

service contracts. Simply stated, the poor management of service

contracts undermines the government’s ability to obtain good value for the

money spent. This contributed to our decision to designate contract

management a high-risk area for the Departments of Defense and Energy,

the two largest purchasers within the federal government. Improving

contract management is also among the management challenges faced by

other agencies.

Compounding these problems are the agencies’ past inattention to

strategic human capital management. As I noted earlier, we are concerned

that federal agencies’ human capital problems are eroding the ability of

many agencies—and threatening the ability of others—to perform their

missions economically, efficiently, and effectively. For example, we found

that the initial rounds of downsizing were set in motion without

considering the longer-term effects on agencies’ performance capacity.

Additionally, a number of individual agencies drastically reduced or froze

their hiring efforts for extended periods. Consequently, following a decade

of downsizing and curtailed investments in human capital, federal

agencies currently face skills, knowledge, and experience imbalances that,

without corrective action, will worsen, especially in light of the numbers

of federal civilian workers becoming eligible to retire in the coming years.

I would like to use DOD’s experience to illustrate this problem. As we

recently testified,20 DOD’s approach to civilian workforce reduction was

 20 Human Capital: Major Human Capital Challenges at the Departments of Defense and

State (GAO-01-565T, Mar. 29, 2001).
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not oriented toward shaping the makeup of the force. Rather, DOD relied

primarily on voluntary turnover and retirements, freezes on hiring

authority, and its authority to offer early retirements and “buy-outs” to

achieve reductions. While DOD had these kinds of tools available to

manage its civilian downsizing and to mitigate the adverse effects of force

reductions, its approach to civilian force reductions was not really

oriented toward shaping the workforce for the future. In contrast, DOD

did a much better job managing active-duty military force reductions

because it followed a policy of trying to achieve and maintain a degree of

balance between its accessions and losses in order to shape its forces with

regard to rank, specialties, and years of service.21 As a result, DOD’s

current civilian workforce is not balanced and therefore poses risks to the

orderly transfer of institutional knowledge. According to DOD’s

Acquisition 2005 Task Force, “After 11 consecutive years of downsizing,

we [DOD] face serious imbalances in the skills and experience of our

highly talented and specialized civilian workforce,” putting DOD on the

verge of a retirement-driven talent drain.22

DOD’s leadership had anticipated that using streamlined acquisition

procedures would improve the efficiency of contracting operations and

help offset the effects of workforce downsizing. However, the DOD

Inspector General reported that the efficiency gains from using

streamlined procedures had not kept pace with acquisition workforce

reductions. The Inspector General reported that while the workforce had

been reduced by half, DOD’s contracting workload had increased by about

12 percent23 and that senior personnel at 14 acquisition organizations

believed that workforce reductions had led to problems such as less

contractor oversight.

While I have discussed DOD’s problems at length, we believe our concerns

are equally valid regarding the broader civilian agency contracting

community. For example, our analysis of personnel data maintained by

 21 Human Capital: Strategic Approach Should Guide DOD Civilian Workforce

Management (GAO/T-GGD/NSIAD-00-120, Mar. 9, 2000).

22 Shaping the Civilian Acquisition Workforce of the Future, Final Report of the

Acquisition 2005 Task Force to the Under Secretary of Defense, Acquisition, Technology,

and Logistics and the Under Secretary of Defense, Personnel and Readiness (October

2000).

23 DOD Acquisition Workforce Reduction Trends and Impacts, Office of the Inspector

General, Department of Defense (Feb. 29, 2000).
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OPM shows that while DOD downsized its workforce to a greater extent

than the other agencies during the 1990s, both DOD and the other agencies

will have about 27 percent of their current contracting officers eligible to

retire through the end of fiscal year 2005. Consequently, without

appropriate workforce planning, federal agencies could lose a significant

portion of their contracting knowledge base.

As we underscored through our January 2001 designation of strategic

human capital management as a governmentwide high-risk area, the

federal government is facing pervasive human capital challenges. These

challenges are eroding the ability of many agencies—and threatening the

ability of others—to economically, efficiently, and effectively perform

their missions. Many parties will need to work to address the government’s

human capital problems, including the President, department and agency

leaders, OMB, OPM, the Congress, the private sector, foundations and

academia, and even the press.

We believe that fundamental human capital legislative reform will

eventually become a reality. However, agencies must first take the steps

available to them under current laws and regulations to better manage

their people. Second, agencies and the Congress alike should explore

several legislative opportunities to help attract, motivate, and retain

employees, both overall and especially in connection with critical

occupations such as those in the information technology area. Finally, all

interested parties should work together to determine the nature and

extent of more comprehensive human capital (or civil service) reforms

that should be enacted over time. These reforms should include placing

greater emphasis on skills, knowledge, and performance in connection

with federal employment and compensation decisions.

Human capital issues have particular bearing on the information

technology area. How successfully the federal government acquires and

uses information technology will continue to hinge on its ability to build,

prepare and manage its information technology workforce. Agencies must

overcome two basic challenges related to IT human capital: a shortage of

skilled workers and the need to provide a broad range of related staff

training and development. These challenges must be addressed so that

federal managers and staff can effectively operate and maintain

government systems, adequately oversee related contractor support, and

deliver responsive service to the public.

Summary
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For further information regarding this testimony, please contact Victor S.

Rezendes, Managing Director, Strategic Issues, on (202) 512-6806 or at

rezendesv@gao.gov. For information specific to the information

technology portion of this testimony, please contact David L. McClure,

Director, Information Technology Management, on (202) 512-6240 or at

mcclured@gao.gov. For further information specific to the acquisitions

related portion of this testimony, please contact David E. Cooper,

Director, Acquisition and Sourcing Management, on (202) 512-4841 or at

cooperd@gao.gov. Individuals making key contributions to this testimony

included Stephen Altman, Margaret Davis, Ralph Dawn, Gordon Lusby,

and Joseph Santiago.

Contact and

Acknowledgments
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Page 30 GAO-01-1007T

Strategic Planning: Establish the agency’s mission, vision for the

future, core values, goals and objectives, and strategies.

Shared vision

Human capital focus

Organizational Alignment: Integrate human capital strategies with the

agency’s core business practices.

Improving workforce planning

Integrating the “HR” function

Leadership: Foster a committed leadership team and provide for

reasonable continuity through succession planning.

Defining leadership

Building teamwork and communications

Ensuring continuity

Talent: Recruit, hire, develop, and retain employees with the skills

needed for mission accomplishment.

Recruiting and hiring

Training and professional development

Workforce deployment

Compensation

Employee-friendly workplace

Performance Culture: Empower and motivate employees while

ensuring accountability and fairness in the workplace.

Performance management

Performance incentives

Continuous learning and improvement

Managers and supervisors

Job processes, tools, and mission support

Information technology

Inclusiveness

Employee and labor relations

Source: Human Capital: A Self-Assessment Checklist for Agency Leaders (GAO/OCG-00-14G,

September 2000).

Attachment I: GAO’s Human Capital

Framework
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Page 31 GAO-01-1007T

Agency Illustrative human capital challenges

Agriculture Organizational culture problems, including resistance from affected USDA agencies and

employees, have hampered departmentwide reorganization and modernization efforts. Further,

the nation’s food safety system, in which USDA plays a major role, continues to suffer from

inconsistent oversight, poor coordination, and inefficient deployment of resources.

Bureau of

Indian Affairs

Untrained and inexperienced staff hamper effective management of $3 billion in Indian trust

funds.

Commerce A lack of sufficient numbers of experienced staff with the right expertise limits the ability of

Commerce and two other trade agencies to monitor and enforce trade agreements.

Defense In the past two years, the military services have struggled to meet recruiting goals. Attrition

among first-time enlistees has reached an all-time high. The services face shortages among

junior officers, and problems in retaining a range of uniformed personnel, including intelligence

analysts, computer programmers, and pilots. On the civilian side, skills and experience

imbalances following downsizing are jeopardizing acquisitions and logistics capabilities.

Energy Headquarters and field staff have lacked contract management skills to oversee large projects,

such as the cleanup of radioactive and hazardous waste sites.

Environmental Protection Agency EPA has not yet implemented any systematic means of determining the right size, skills needs,

or deployment of its workforce to carry out its mission and achieve its strategic goals and

objectives, despite the demand for new skills due to technological changes and the shift in EPA’s

regional environmental responsibilities to the states, as well as growing retirement eligibilities in

its workforce.

Federal

Aviation

Administration

In major acquisition projects, FAA has lacked technical expertise to address vital project issues.

Attachment II: Examples of Federal Agencies

with Human Capital Challenges
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Page 32 GAO-01-1007T

Agency Human capital challenges

Centers for Medicare and Medicaid

Services

Medicare’s leadership problems include the lack of any official whose sole responsibility it

is to run the program. Further, frequent leadership changes at CMS have hampered longterm Medicare initiatives and the pursuit of a consistent management strategy. CMS’

workforce lacks skills needed to meet recent legislative requirements. The mismatch

between CMS’ administrative capacity and its mandate could leave Medicare unprepared

to handle future population growth and medical technology advances.

Housing and

Urban

Development

As HUD’s reorganization moves into its final phases, workload imbalances pose

programmatic challenges to several specialty centers and field offices. Single family

mortgage insurance programs administered by HUD’s Federal Housing Administration

have been marked by a number of human capital challenges, including insufficient staff.

Further, insufficient or inexperienced staff led to problems in quality assurance reviews for

203(k) home rehabilitation loans and oversight of appraisers and mortgage lenders.

Immigration and Naturalization

Service

Lack of staff to perform intelligence functions and unclear guidance for retrieving and

analyzing information hamper efforts to combat the growing problem of alien smuggling.

Interior and U.S. Forest Service Difficulties replacing experienced fire personnel threaten firefighting capabilities during

catastrophic events.

Internal

Revenue

Service

IRS lacks reliable cost and operational information to measure the effectiveness of its tax

collection and enforcement programs and to judge whether it is appropriately allocating its

staff resources among competing management priorities.

National Aeronautics and Space

Administration

Staff and skills losses following downsizing pose potentially serious problems for the

safety and planned flight rate of the space shuttle.

National Park

Service

Historically, the Park Service’s decentralized priority-setting and accountability systems

left it without the means to monitor progress toward achieving its goals or hold park

managers accountable for the results of park operations. The park concessions program

continues to face management problems, including inadequate qualifications and training

of the agency’s concession specialists and concessions contracting staff. Insufficient fire

safety training has contributed to fire safety risks at visitor centers, hotels, and other

national park buildings.
Human Capital: Building the Information

Technology Workforce to Achieve Results

Page 33 GAO-01-1007T

Agency Human capital challenges

Nuclear

Regulatory

Commission

NRC’s organizational culture is struggling with the agency’s new “risk-informed” regulatory

approach. Further, NRC’s ability to maintain the skills needed to achieve its mission and fill

the gaps created by growing retirement eligibilities could be threatened by the decline in

university enrollments in nuclear engineering and other fields related to nuclear safety.

Pension

Benefit

Guaranty

Corporation

Because the agency did not adequately link its contracting decisions to long-term strategic

planning, it may not have the cost-effective mix of contractor and federal employees

needed to meet future workload challenges. Further, PBGC employees who monitor

contractors lack adequate guidance and policies essential to monitoring contractor

performance.

Social Security Administration Increasing demand for services, imminent retirement of a large part of its workforce,

changing customer expectations, and mixed success in past technology investments will

challenge SSA’s ability to meet its service delivery demands, which include faster and

more accurate benefit claims determinations and increased emphasis on returning the

disabled to work.

State Issues related to the quality of life at overseas posts, career development opportunities,

and talent management are hampering recruitment and retention of Foreign Service

Officers. Efforts to determine the right size and composition of overseas posts have begun,

but State faces challenges in aligning its workforce with new economic, political, security,

and technological requirements. Also, staffing shortfalls are hampering counternarcotics

programs and efforts to combat visa fraud.

US Agency for International Development Staffing shortfalls in the procurement area have hampered the agency’s ability to initiate

and monitor contracts, thus delaying reconstruction assistance in the wake of natural

disasters in Central America and the Caribbean.

Veterans Affairs A national nursing shortage could adversely affect VA’s efforts to improve patient safety in

VA facilities and put veterans at risk. Further, VA’s training and recruitment programs may

not be adequate to ensure a sufficient workforce of competent claims processors, which

would likely undermine efforts to improve current problems of claims processing backlogs

and errors.

Source: GAO’s Performance and Accountability Series, numbered GAO-01-241 to 262, January

2001.
Human Capital: Building the Information

Technology Workforce to Achieve Results

Page 34 GAO-01-1007T

Attachment III: Addressing the Human

Capital Challenge: Shared Responsibilities

(450063)

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• Partner

• Recognize

• Support

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• Research

• Integrate

• Academia

• Partner

• Revise

• Promote

• Media

• Learn

• Investigate

• Report
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